EXPLANATORY STATEMENT

Issued by the Authority of the Attorney-General

Bankruptcy (Fees and Remuneration) Determination 2007

Background

The Bankruptcy Legislation Amendment (Debt Agreements) Act 2007 introduced a requirement that a debt agreement administrator who is administering more than 5 active debt agreements entered into on or after 1 July 2007 must be a registered debt agreement administrator.

As part of this new scheme, paragraphs 186B(2)(c) and 186D(1)(b) of the Bankruptcy Act 1966 (the Act) provide that fees are payable in respect of an application to become registered as a debt agreement administrator and, if such an application is successful, upon registration as a debt agreement administrator. The registration fee will also apply in respect of renewals of registration. The power to set these fees by legislative instrument is contained in paragraph 316(1)(a).

The Bankruptcy (Fees and Remuneration) Determination 2007 facilitates cost recovery arrangements for the provision of personal insolvency services by the Insolvency and Trustee Service Australia (ITSA), consistent with the Government’s cost recovery policy.

Under ITSA’s cost recovery arrangements, the application and registration fees are set at a level designed to recover the costs of the processing of applications for registration as a debt agreement administrator and the maintenance of the registration of the administrator.

The level of the fees will be reviewed on a biennial basis so that it reflects the costs of providing the registration services to administrators.

Purpose

The determination reproduces the Bankruptcy (Fees and Remuneration)

Determination 2006, the only changes being:

• the insertion of a new section 1.03 which repeals the former determination;
• the insertion of new items 10 and 11 in the table contained in section 2.01, which prescribe the fees for the purposes of paragraphs 186B(2)(c) and 186D(1)(b) of the Act;
• the recasting of subsections 2.01(1), 2.01(2) and 3.01(1) into simpler and clearer language, without effecting any change to the operation of these subsections;
• the insertion of a missing comma in subsection 3.01(3); and
• consequential renumbering and cross-referencing.

The fee payable in respect of the making of an application for registration as a debt agreement administrator pursuant to paragraph 186B(2)(c) is set at $2000.

The fee payable in respect of the registration of a person as a debt agreement administrator pursuant to paragraph 186D(1)(b) is set at $1200.

The costs associated with the processing of applications and registrations for debt agreement administrators are similar to that for registered trustees. The fees pursuant to paragraphs 186B(2)(c) and 186D(1)(b) have therefore been set at rates equivalent to the fees payable in respect of applications and registrations of registered trustee pursuant to Part VIII Division 1 of the Act.

The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Operation

The Determination commences on the first moment of the day following the day when the instrument is registered.

Nature of Consultation

ITSA and the Attorney-General's Department conducted a comprehensive review of the operation of Debt Agreements in late 2005. A report on that review was released by the Attorney-General in March 2005.  A key outcome of that review is the introduction of a formal registration scheme for debt agreement administrators.

ITSA’s fees and charges have been based on cost recovery principles since 1 July 2006.  Those fees and charges were developed following extensive consultation.  ITSA has established a Cost Recovery Reference Group which includes representatives of all key stakeholders.  Prior to introducing the new system, ITSA announced that it would conduct a biennial review of all fees and charges unless intervening events had a significant impact on costs warranting an earlier review.  The introduction of a registration system for debt agreement administrators required an additional review to ensure the costs associated with that system were recovered appropriately.  There was specific consultation with the industry (including two Discussion Papers and a further meeting of the Cost Recovery Reference Group) between October and December 2006.